The Ballmer’s recent $400mm commitment to PE/VC - and how this may affect the world of Donor Advised Funds

Investing in venture capital by way of Donor Advised Funds.

In case you missed it, Steve Ballmer, former CEO of Microsoft, and his wife, Connie, have committed $400 million to Black private equity and venture capital managers. 

As part of this $400 million commitment, the Ballmers made a $100 million anchor investment in a new fund of funds managed by Goldman Sachs, called Black Equity Opportunities LLC, which will make investments exclusively in Black-led venture capital and private equity funds, with at least 30% of underlying portfolio companies led by Black entrepreneurs/founders.

The strategy (both from an investment and social impact angle) is simple: focus on economic mobility within underserved communities, specifically Black communities. Although they have made $420 million of philanthropic grants towards improving economic mobility via the Ballmer Group (their foundation), as Steve says, “philanthropy eventually runs out of money”. Steve and Connie believe the best way to affect change is via investments into Black businesses, which fuels a flywheel: investing in Black-led businesses results in more jobs in Black communities, which then drives opportunity for wealth building in the Black community, which then allows for more investment into Black-led businesses, and so on. And make no mistake: the Ballmers are expecting market-rate returns for this investment. 

Why am I particularly excited about this investment?

I had the timely opportunity to hear from Steve and Connie Ballmer at an intimate philanthropy conference last week put on by Goldman Sachs, where they spoke about this investment. Although this investment is funded from “Ballmer’s own assets” (vs. their foundation, the Ballmer Group), it’s unclear whether this investment came out of the Ballmer family’s DAF (Donor Advised Fund), which conveniently sits at Goldman Sachs….regardless, Steve Ballmer excitedly mentioned during the conference that Goldman Sachs will be making future investments into the Black Equity Opportunities LLC fund of funds available to other DAF clients very soon (Goldman is still raising against its $200 million target for this fund. 
As I wrote about in a prior post, the DAF world is growing in size and flexibility - and allowing donors to use their philanthropic dollars to invest in venture capital is a wonderful opportunity for both established and emerging managers to raise capital from mission-aligned investors. Thanks, Ballmers, for moving the needle in this respect.

Kasey Lundquist

Photo: Steve Ballmer courtesy of Fortune Magazine